Dull session winds down in London

Chris Beauchamp IG

A quiet start to the week in London and across Europe has seen the FTSE 100 drop back, while contractor Babcock suffers another fall.

European markets have continued on in their quiet way today, marking time without the US and feeling oddly bereft after bank earnings on Friday heralded the start of reporting season. Overall stock markets have failed to take much heart from the Chinese GDP data overnight, and instead a cautious atmosphere has prevailed in London and on other bourses. Normal service is resumed tomorrow, and for today it look like the FTSE 100 will see out the day with small losses. Given how far stocks have come since the end of October some hesitancy about the next steps is understandable – much of the good news that may be imparted by earnings season has already been factored in, and perhaps the best we can hope for is a collective shrug of indifference, avoiding any major selloff in the near-term.

Babcock investors who were hoping for a respite today have been disappointed. Today’s drop of 6% takes the shares to a fifteen-year low, as shareholders continue to head for the exits. Any positive news on the stock has been outweighed by the huge overhang of uncertainty thanks to the contract review, and momentum traders continue to pile in as well, scenting weakness and hoping for more.

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Chris Beauchamp

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